In the case of Krason v HMRC [2026] UKFTT 675 (TC), the FTT has allowed the appeal, setting aside penalties of £224,750 charged in respect of a tax avoidance scheme. The FTT found that the scheme had been misrepresented to Mr Krason, who had not acted deliberately, with concealment or carelessly.
INCOME TAX – penalties – whether deliberate and concealed – no – whether careless – reliance on trusted qualified accountant – appeal allowed and penalties cancelled
Mr Krason, a Polish dentist working in the UK, had been advised by Mr Davood of Moor Green that the arrangement was a legitimate tax planning scheme, when in fact it was a complex tax avoidance structure involving loans and an offshore trust. Mr Krason trusted Mr Davood. He had originally been recommended by colleagues, and, at the time the arrangement had begun, he had been his adviser for seven years. Furthermore he had worked for HMRC and was also a member of several accounting bodies. In addition to misrepresenting the scheme, Mr Davood had amended and resubmitted Mr Krason’s tax return without his knowledge and had redacted banks statements provided to HMRC to conceal the circular nature of the transactions.
Considering the matter, the FTT concluded that it was entirely credible that Mr Krason had failed to understand what he had agreed to and that he did not appreciate that the arrangement did not work because of the complex nature of the documents; Mr Krason’s ignorance of financial matters generally and about the concept of a trust; the fact that English was not his native tongue; and Mr Krason’s complete trust in Mr Davood as an expert in the field of taxation. Mr Krason’s subsequent behaviour over the years in which the scheme had been in operation and his co-operative actions once he began to represent himself before the FTT confirmed this. The FTT concluded that he “did not act deliberately, and the inaccuracy was not ‘deliberate and concealed’.”
Considering whether Mr Krason had been careless, the FTT judged that he had not been as he:
“had no reason not to trust and rely on Mr Davood, who held himself out as a recognised tax expert as a previous HMRC employee and as the member of numerous professional bodies” … [a] reasonable taxpayer, with no knowledge of tax and no grasp of financial matters, would have relied on qualified skilled professionals. That is exactly what Mr Krason did. Unfortunately, his trust in Mr Davood was misplaced, but that does not mean it was unreasonable.”
Noting the considerable financial hardship that Mr Krason had been exposed to in agreeing to repay the outstanding tax, the FTT invited HMRC to reconsider its earlier costs decision.
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/675
Related content from Claritax Books
In Taxpayer Safeguards – Rights and Protections for Individuals, written by the late Robin Williamson and now updated by Keith Gordon, the authors explore the whole spectrum of protections available to individual taxpayers.
